Some say that up to 96% of new businesses make this mistake. That may not be accurate, but certainly many do – and this is what you can do to avoid it.
What most people seem to do when they start a new business is they organize premises (even if that’s just a spare bedroom), some stock and/or equipment, and they open for business at that point. They then discover that there isn’t a market, or if there is a market then they can’t connect to and influence that market. As a result they hang on until all their money is gone then they close the doors and walk away.
The mistake most people make is that they identify a market – thinking that “Everyone will see that our widgets are superior”, and they get into business on that basis. What they fail to recognise is that not only does the market have to exist, you also have to be able to communicate with that market and influence at least some of the members to buy from you. If you cannot influence them to buy from you then effectively – for you at least – there is no market.
Running a failing business until all your money is gone is no way to discover that you can’t connect to a market. There is a better way.
All you have to do is describe your idea in a few simple sentences and send that in an email to about a half-dozen of your contacts. Ask for their feedback, and also let them know that you will add their suggestions and resend it to them. There are details on how to get a template that provides the exact wording below.
The second time you send it you send it to about 20 people. Once again you ask for their feedback, and let them know you will incorporate it and resend.
The third time you send it out to about 50 people, asking for their feedback. When you have that feedback you know that you can describe your idea in a way that will connect to the target market, and that you can successfully influence people to buy from you. Or you know that the idea is not likely to succeed, in which case you can shelve it or modify it as necessary.
Spending a little time creating, editing and sending out an email three times is a lot less expensive than running a business until all your money is gone, and a lot quicker. In fact all it requires is a little of your time so your financial risk is minimized.
I like to keep posts to a modest size so I haven’t included the template and detailed instructions here, however there is an exact template in my book (Kindle version http://amzn.to/1UnizIU) that gives you everything you need to know.
Remember that you can find all the posts in this series by searching for the category ‘Incubator’.